Which law requires lenders and dealerships to provide an adverse action notice?

The correct answer is the Equal Credit Opportunity Act (ECOA). This law is designed to ensure that all consumers have equal access to credit and prohibits lenders from discriminating against applicants on the basis of race, color, religion, national origin, sex, marital status, age, or because they receive public assistance.

One of the significant requirements of the ECOA is the obligation for lenders and dealerships to provide an adverse action notice. This notice is required when a credit application is denied or when the terms of credit offered are less favorable than requested. The purpose of this notice is to inform applicants of the decision and the reasons behind it, as well as their rights to inquire further about the decision. Ensuring transparency in the lending process and protecting consumers' rights is central to the ECOA’s mission, thus making it vital for lenders to comply by issuing these notifications to applicants.

The other laws listed have different focuses: the Fair Credit Reporting Act (FCRA) primarily governs the collection and use of consumer credit information; the Truth in Lending Act (TILA) focuses on the disclosure of credit terms to consumer borrowers; and the Credit CARD Act addresses credit card practices and fees. None of these laws specifically establish the requirements for adverse action notices in